Wake Up On Tax, Cameron Tells Companies

David Cameron has declared that companies who want to do business in Britain must pay their fair share of tax in a strident speech at Davos.

The Prime Minister said abuse of tax systems was "an issue whose time has come" and that he wanted to make sure individuals and companies "pay their fair share".

He vowed that Britain would use its presidency of the G8 group of rich nations to push for global action against tax evasion and "aggressive" tax avoidance by firms and the super-rich.

At the World Economic Forum in Switzerland, he told an audience of CEOs and investors: "I am a low-tax Conservative but I'm not a companies-should-pay-no-tax Conservative."

"Individuals and businesses must pay their fair share," he insisted as he urged world leaders to ramp up their efforts. "This is a problem for all countries not just for Britain," he said.

In some of his strongest language about the issue to date, Mr Cameron turned on businesses using intricate mechanisms to minimise their payments.

"Any businesses who think that they can carry on dodging that fair share or that they can keep on selling to the UK and setting up ever-more complex tax arrangements abroad to squeeze their tax bill right down - well, they need to wake up and smell the coffee because the public who buy from them have had enough," he said.

The Prime Minister did not mention any companies by name but both Starbucks and Google have recently come under fire for manipulating transfer prices to shift profits into low tax jurisdictions.

Starbucks and Google both insist that they fully comply with UK tax law but the revelations about their payments, among those of other firms, sparked a major backlash last year.

"There's nothing wrong with sensible tax planning, and there are some things governments want people to do that reduce tax bills, such as investing in pensions, start-up businesses or charities," Mr Cameron said.

"But some forms of avoidance have become so aggressive that I think it is right to say these raise ethical issues and it's time to call for more responsibility and for governments to act accordingly."

During a brief question and answer session, Mr Cameron shrugged off concerns that his stance on tax, coupled with his position on Britain and the European Union, would deter investors.

He insisted the changes in Europe could not be ignored and pointed to low corporation tax rates in Britain as a boost for businesses.

"I think Britain has a great offer for businesses. We are cutting our tax rates and going to be one of the most tax competitive countries anywhere in the world," he said.

"It is a perfectly fair argument to make to say we will cut our tax rates and be competitive but in return we do ask that people pay their fair share."

TUC general secretary Frances O'Grady said global efforts to tackle avoidance need to be matched by "tougher action" domestically.

"The UK remains a global leader for tax secrecy, both through the City and its crown dependencies," she said.

"The Government should start to close the UK's multi-billion tax gap with a far tighter general anti-avoidance principle and minimum tax rates so that the super-rich begin to pay their fair share."